Question

Rent controls force landlords to price apartments below the equilibrium price level. An immediate effect is a shortage (excess demand) of apartments, because the quantity of apartments demanded is greater than the quantity supplied at the regulated price. When cities prevent landlords from charging market rents, which of the following are common long-run outcomes?
A. The quantity of available rental housing units falls.
B. Landlords earn lower profits from renting housing units, but the rent charged has no effect on either the quantity or quality of rental units.
C. Nonprice methods of rationing emerge.
D. Efficient use of housing space results.

Answer 1

Answer:

C. Nonprice methods of rationing emerge.

Explanation:

Since the landlords can only rent the apartments on the regulated price, no matter how high the demand nor how low the supply, it is inevitable that certain rationing model would appear, that is not based on the cost of the apartment.

Perhaps the landlords would prioritize families to move in to their apartment, or maybe the landlords would prioritize individuals who are not from out-of-state. It is also possible to prioritize by other aspects, such as gender or race.